Cash $16,800 Inventory 7.000 Land 2,600 Common stock 15,000 Retained earnings 11,400 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $11,800 on account from Ross Company under terms 2/10, 1/30. The merchandise was delivered FOB shipping point Freight costs of $860 were paid in cash the responsible party 2. Returned $750 of the inventory it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost 3. Poid the amount due on its account payable to Ross Company within the cash discount period. 4. Sold Inventory that had cost $9,500 for $15,500 on account, under terms 2/10, 1/45. 5. Received merchandise returned from a customer. The merchandise originally cost $1,500 and was sold to the customer for $2,700 cash. The customer was paid $2.700 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $750 were paid in cash by the responsible party, 7. Collected the amount due on the account receivable within the discount period, 8. Sold the land for $4,700. 9. Recognized accrued interest income of $550. 10. Took a physical count indicating that $7,100 of inventory was on hand at the end of the accounting perlod. Hint Determine the curreht balance in the inventory account before calculating the amount of the inventory write down Required: a. Explain how each event would affect the financial statements by placing a * for increase, - for decrease, and +/- for increase and decrease under each of the components in the following statements model. Assume that the perpetual inventory method is used. When an event has more than one part, use letters to distinguish the effects of each part. The first event is recorded as an example. b. Record the events in general journal format. Assume that the perpetual inventory method and gross method is used. c. Post the beginning balances and the events to the T-accounts. Note that these ledger accounts will also be used when posting the closing entry that is created in Parte. d. Prepare a multistep income statement, a statement of changes in stockholders' equity, and a balance sheet for Year 2. e. Use a single general Journal entry to close all revenue, gain, and expense accounts to the retained earnings account. Post the Journal entry to the ledger accounts and prepare a post-closing trial balance. Cash Cash Inventory Beg. Bal. Beg. Bal. End. Bal. End. Bal End. Bal Accounts Receivable Interest Receivable Beg. Bal. Beg. Bal End. Bal. End. Bal Land Accounts Payable Beg. Bal. Beg. Bat End, Bal End. Bal. Common Stock Retained Earnings Bog. Bal. Beg Bal Prepare a multistep income statement for Year 2. REDD COMPANY Income Statement For the Year Ended December 31, Year 2 0 Operating expenses 0 Nonoperating items $ 0 Prepare a statement of changes in stockholders' equity for Year 2. REDD COMPANY Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 $ 0 O Total stockholders' equity $ 0 Prepare a balance sheet for Year 2. REDD COMPANY Balance Sheet As of December 31, Year 2 Assets Total assets $ 0 Liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity 0 $ 0 Journal entry worksheet